The early years – On the way to the top of the world (1880–1914)
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Carl Thieme (von Thieme from 1914)
Co-founder of Munich Re and Chair of the Board of Management from 1880 to 1921.
He foresees opportunities for development in the industry – also for him personally – and gathers wealthy investors to set up a reinsurer that is independent of primary insurers. This concept is not new and is controversial. But as co-founder and Chair of the new company, Thieme pursues his vision consistently, and is successful. Under his management, in its third year of business Munich Re is already the leading reinsurer in Germany.
Munich Re’s license from 1880
On 15 March 1880, the Royal Bavarian State Ministry of the Interior grants a licence to establish a reinsurance company in Munich. Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München is officially founded on 3 April 1880. The founders are Messrs. Cramer-Klett, Finck, von Schauss, Pemsel, Schmidt-Polex and Thieme.
In April 1880, Carl Thieme commences business operations with a staff of four. A few weeks later, Carl Schreiner joins the Company to run the office. Other than Thieme, he is the only member of staff who has already worked in the insurance business. Munich Re's first office comprises two rooms in a building at Maffeistrasse 1, which is known as the Munich “stock exchange bazaar”.
At this time, there is a huge gulf between the information available to reinsurers and primary insurers – and a latent danger that bad risks could be intentionally transferred to the reinsurers. Also most reinsurers focus on just a few business partners with good credit ratings, but Thieme is banking on the compensatory effect of a wide spread of business. His strategy is to increase premium rapidly with as many cedants as possible in order to spread the risk broadly. This strategy pays off, especially as Munich Re tries to ensure that treaties are written in such a way as to avoid one-sided transfer of risk to its detriment. Munich Re also shares part of its profits with its primary insurance partners, thus giving them an incentive to make a careful assessment of the risk. The first reinsurance treaty is concluded with Thuringia. This and 32 other treaties are signed in the first year of operation, with premium income of around a million marks.
1880–1881 – International from the start
International risk diversification is part of Munich Re's corporate strategy from the outset. The first foreign client is Allgemeine Versicherungsgesellschaft Phönix in Vienna in 1880. Munich Re also succeeds in breaking indirectly into the US market with a treaty with Transatlantische Feuer-Versicherungs-Gesellschaft in Hamburg. In 1881, treaties follow with Nadeschda in St. Petersburg, the London and Lancashire Fire Insurance Company, and Assicurazioni Generali in Trieste.
1883 – International business suffers setbacks
Despite some initial success, Munich Re at first fails to become established in the British and Russian markets. Regional risk diversification remains low, and is limited to the similarly structured neighbouring countries Austria-Hungary and Switzerland, and to Scandinavia.
1886 – First offices abroad
The first representative offices open in Vienna and Hamburg in 1881, with the Hamburg office also handling business in Scandinavia. In 1886, Munich Re opens its first branch in Paris.
1887 – Growth in Russia
In 1887, Munich Re begins to expand its presence in Russian marine insurance, and concludes reinsurance treaties with insurers Rossija, Russian Lloyd and Volga that cover inland and ocean marine business.
1888 – First shareholdings in primary insurers
In 1887, Munich Re and the Hamburg insurer Feuer-Assecuranz-Compagnie von 1877 set up Hamburg-Munich United, a primary insurance company in the eastern Mediterranean. Much more important is Munich Re's shareholding in the Russian personal accident insurer Pomoschtsch in 1888. Thieme and several members of the Supervisory Board purchase the shares personally but, in fact, this is Munich Re's first equity capital investment and its first participation outside Germany.
1888 – Stock market flotation
Munich Re’s shares are introduced on the Munich Stock Exchange in March 1888. The financial world predicts a glossy future for the Company. Premium and loss reserves have risen eight-fold since the Company was founded. Shares paid in at 400 marks are placed at a price of up to 710 marks.
1888 – First life reinsurance treaty
The first life reinsurance treaty is signed on 3 July with the Russian Company for the Insurance of Capital and Annuities in St. Petersburg.
Carl Thieme and Wilhelm Finck (he became von Finck in 1905) agree to set up an independent accident and marine insurance company in Berlin. On 17 September, Allianz Versicherungs-AG is established by notarised agreement by Merck, Finck & Co., Deutsche Bank and other shareholders.
Ten years after it was founded, Munich Re has many business clients across continental Europe. But it hardly has a foot in the market in the world's two leading insurance markets – the United Kingdom and the USA. In order to change this, Carl Schreiner – one of the Company's very first employees, and Board member as from 1913 – is tasked with opening an office in London.
After the successful opening of the London office, in August 1892 Carl Schreiner crosses the Atlantic for the first time in order to open up the US market for Munich Re. Many foreign reinsurers are now crowding into this market, and there are accusations that they are pushing their way in with artificially low premiums. Consequentially, several states introduce a licence requirement. In order to receive a licence, Munich Re needs to show that it has a registered office in the USA. It sets up a branch in New York in 1897 – the Munich Re-Insurance Company, United States Department.
1898 – Development of machinery insurance
Munich Re develops a completely new form of insurance for machinery. The first “accident insurance for machinery” is offered by Allianz at the turn of the century, but initially only in Bavaria. All of the risk is covered by Munich Re. Four years later, machinery insurance is marketed across all of Germany by several primary insurers.
1899 – Natural hazard cover available for the first time
Storm and flooding are still regarded as uninsurable risks when Kölnische Unfallversicherung offers storm coverage for the first time in 1899. Munich Re is involved and covers 50% of the risk.
1904 – The first large loss
On 7 February 1904, a large fire breaks out in Baltimore. Munich Re pays out for losses of around 4 million marks without having to use its assets. In the following annual report, the Company said that its US business had survived its “baptism by fire”.
1906 – San Francisco earthquake and fire
On the morning of 18 April, the city of San Francisco is shaken by an earthquake measuring 8.3 on the Richter scale. Gas mains rupture, and the city is on fire for four days. More than 3,000 people lose their lives, and around 28,000 houses are destroyed. First estimates put overall damage at around US$ 300 million, with insured losses amounting to around US$ 175 million. Munich Re's share amounts to 11 million marks. In order to highlight the extent of the damage: it represents 7% of gross premium income for the financial year 1905–1906.
In 1907, a former wood trader sets up the Europäische Güter- und Reisegepäck-Versicherungs AG in Budapest. For the first time, the company offers travellers the opportunity to insure their baggage without the contents being checked. Munich Re takes a participation of one-sixth of the shares in the company later known as Europäische Reiseversicherung.
1907 – Cover for motor liability
Another new field of business is motor liability, which had been introduced in 1899. At that time, cars were still a rare, luxury item. As the number of vehicles being used for commercial purposes rises, an insurance association is set up in which Munich Re has a small participation.
In 1910, the Company already has 421 staff members at its headquarters in Munich. Its offices at Maffeistrasse 1 have become too small. Many staff are working in unsuitable rooms, and the offices are spread across several buildings. In June 1911, Munich Re buys land on Königinstrasse for 900,000 marks and decides to build a Head Office, a project resulting in the construction of what is now known as the Main Building.
1912 – Skeleton construction work is done
In June 1912, Munich Re celebrates completion of basic construction work on the new Main Building.
Construction of the current Main Building (1912/13).
Munich Re concludes a reinsurance treaty with Nippon Fire Insurance Company in Japan.
1913 – Move to the new Main Building
On 20 March 1913, the new Main Building is handed over by the architects Eduard Oswald Bieber and Wilhelm Hollweck.
Munich Re’s office building at Königinstrasse 107, now known as the Main Building, in a photograph from 2011.
1913–1914 – Undisputed global market leader
Before the First World War, Munich Re is the undisputed global market leader among reinsurance companies. In 1913–1914, it generates gross premium income of 204 million marks. By way of comparison: the next two largest companies, Schweizer Rück and Kölnische Rück, generate 42 million and 41 million marks respectively.
